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A business must choose between two projects, Project K and Project L, with a budget of $180,000. The anticipated cash flows are: Project K: Year
A business must choose between two projects, Project K and Project L, with a budget of $180,000. The anticipated cash flows are:
Project K:
- Year 1: $45,000
- Year 2: $45,000
- Year 3: $45,000
- Year 4: $45,000
- Year 5: $45,000
Project L:
- Year 1: $20,000
- Year 2: $30,000
- Year 3: $40,000
- Year 4: $50,000
- Year 5: $60,000
The discount rate is 13%.
Required:
- For each project, compute the:
- Payback period
- Discounted payback period
- Net present value
- Internal rate of return
- Profitability index
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